What is the stock market and the price of talking about the stock market

What is the stock market and the price of talking about the stock market

The stock market is the buying and selling of a company’s shares. Stocks are listed securities

What is the stock market

The stock market is the buying and selling of a company’s shares. Stocks are listed securities. Once you purchase the shares of a company, you automatically become a shareholder of the company. You will earn from the stock you bought in two ways; First, through dividends the company pays to shareholders. The second way to earn money is through company appreciation. Depending on the type of stock you bought, dividends are usually calculated based on either a fixed price or a floating rate.

Different types of shares can affect the cost

When it comes to calculating the cost of investing in the stock market, you will have to determine the type of stock you buy. There are different types of shares and they have different market value.

Common stocks; These are the securities that represent the ownership of a company. Once you purchase these shares, you will have the right to vote at any shareholder meeting. However, ordinary shareholders are usually at the bottom of the priority ladder. This means that if the company goes bankrupt, ordinary shareholders will only receive their money after creditors and preferred shareholders. In terms of cost, these stocks have a lower return.

Favorite stocks; These shares give you little ownership of the company but you do not get any voting rights. Shareholders of preferred shares usually receive profits that are calculated at a fixed rate. Her preferred stock has a higher return per share compared to the common stock.

Feast; These are commonly referred to as common stocks of small public companies. A penny stock is usually priced at $ 5 or less.

Factors affecting stock prices

The share price affects the cost of investing in the stock market. Hence it is important to understand the factors that influence stock prices.

Company performance

This is the main factor affecting stock prices. The company's performance indicates the company's profits, current or future. Company performance may be affected by factors such as layoffs, change in company management, a new product or service, scandals, and others. These internal factors directly affect the stock price.

Inflation and deflation

Each of these factors directly affects the stock market. Inflation is where the prices of goods and services increase rapidly. This causes the high cost of manufacturing and transporting goods. In case of inflation, the stock market declines due to lower revenues. On the other hand, deflation is usually the fall in prices for goods and services. While deflation is supposed to be comfortable, most investors do not invest in the stock market. This is because they believe the economy is weak. This causes the stock market to drop.

Interest rates and foreign markets

The interest rates imposed on a company while borrowing money from financial institutions usually affect stock prices. Usually high interest rates affect the company's borrowing, which in turn reduces its profits and dividends. Foreign markets, on the other hand, affect stock prices indirectly. When the economic situation of countries decreases, it negatively affects the stock market. Once the economic situation changes, it affects how foreign countries trade with those countries. This, in turn, will affect the stock market in foreign countries.

Tips for determining the cost of investing in the stock market

It is time to invest when it comes to the cost of investing in the stock market, it just doesn't matter the money. The time you invest in the financial market is also important. You need to decide how much time you want to invest in the stock market.

The number of shares you wish to purchase; The number of shares you will purchase will determine the total amount of money to be used. If you are new to work, it is a good idea to buy a few shares while learning to work. Also remember not to buy all of your shares from one company, diversification is very important.